Fresh doubt hangs over Mozambique projects as renewed insurgency intensifies: Growing industry confidence about a final investment decision (FID) in 2025 for the ExxonMobil and Eni spearheaded 18 million tonnes per year Rovuma LNG export terminal has been dented by reports of the deadliest attack since 2021 carried out by Islamic State-linked fighters on government forces in northeast Mozambique. A raid on the town of Mucojo, roughly 130 kilometers south of the site for TotalEnergies’ neighboring LNG export project, is said to have resulted in the killing of up to 25 Mozambican troops. The promoters of both projects have been talking up the prospects of advancing their respective multi-billion dollar investments in recent weeks despite an upsurge in violence since December from insurgents operating in the region. The boss of Portugal’s Galp, a partner in the Rovuma project, had suggested that an FID was increasingly likely in 2025 owing to “very significant progress” in the security situation. With Total and the Mozambican government pushing for a construction restart at the US$20 billion Mozambique LNG terminal by the middle of this year, it remains unclear how feasible such a target is in light of ongoing developments. According to a representative of Cabo Ligado, a respected group that has been monitoring the six-year conflict in the region, the security situation is “very worrying,” and “the insurgents are gaining more strength.” (Bloomberg, The Energy Year) 

California proposes permanent fracking ban: Three years on from the last issuance of a fracking permit in the U.S. state, CalGEM, California’s oil and gas regulator, has proposed changing state regulations in order to permanently ban new permits for the controversial fossil fuel extraction technique. Although fracking in California has never been widespread — permitted fracking operations accounted for just 2% of statewide oil production in 2021 — CalGEM’s announcement was greeted with dismay by the oil and gas industry. The regulator expects the ban to be approved by the end of 2024 and estimates that it will result in US$190 million in costs incurred by oil and gas operators and bring about a 4% cut in production. Welcoming the news, Hollin Kretzmann, an attorney at the Center for Biological Diversity’s Climate Law Institute, also called for CalGEM to use its authority to ban new permits for oil and gas wells within 3,200 feet of homes, schools, clinics, and other sensitive sites. Following concerted pushback from the oil and gas industry in autumn 2022, legislation on the ban was suspended and awaits a referendum vote later this year. (The Sacramento Bee)

Political battles shaping up ahead of Ukraine transit agreement’s expiry: Preliminary analysis by the European Commission sees no need for an extension of the five-year gas pipeline transit agreement between Russia and Ukraine that is due to expire by the end of this year. In line with Kyiv’s wishes to close down the flows to European customers of roughly 12 billion cubic meters (bcm) of Russian gas per year, the EU’s energy commissioner Kadri Simson told the European Parliament that member states currently reliant on the transit route — primarily Austria, Italy, and Slovakia — would be able to source alternative supply. Slovakia, which last month claimed that Ukraine was open to continuing the Russian gas transit supplies, is the most acutely exposed to the route’s closure. Simson’s remarks come as Austria’s heavy dependence on Russian molecules looks set to become an issue in a national election due to take place this autumn. A 25% decline in Austria’s gas consumption last year has resulted in Russian imports recently comprising as much as 98% of total imports, and the country’s energy minister Leonore Gewessler has set out a three point plan to address this. Austrian utility OMV, which has a long-term import deal with Gazprom, reacted to the minister’s proposals, stating: “If lawmakers wish to abandon Russian gas, the legal basis for that must first be created.” (Reuters, EURACTIV [registration required], Reuters)

South Africa’s first import terminal may be “too late” to avert gas supply crunch: Pretoria’s awarding last month of a 25-year concession for an LNG import terminal at the east coast port of Richards Bay has failed to assuage industry concerns that the country’s first such facility is unlikely to come online in time to make up for a looming gas supply shortage. Onshore gas fields in Mozambique, which supply the eastern coastal region of KwaZulu Natal and are operated by South African petrochemical firm Sasol, are expected to be exhausted by the middle of 2026 while the Richards Bay facility has a target start date of 2027. Although South Africa's Transnet National Ports Authority (TNPA) plans to fast track the project to meet the 2027 timeline, the head of the Industrial Gas Users Association of Southern Africa, Jaco Human, believes Richards Bay is unlikely to come online before the end of the decade. “The fittest horse is the LNG Matola terminal,” said Human, referring to a TotalEnergies proposal in Mozambique. Matola itself is behind schedule, though an FID is being targeted for September 2024. As well as Richards Bay, which has now been estimated to cost at least 7 billion rand (US$372 million), an official at TNPA said that new LNG import hubs were also planned at the Ngqura and Saldanha Bay deep-water ports. Four other ports are also being considered as sites for small and medium-scale LNG facilities. (Reuters, Reuters)

No real traction for U.S. LNG industry in initial parliamentary vote: Proposed legislation to cancel the U.S. federal government’s recently declared pause on LNG export approvals was passed in the Republican-controlled U.S. House of Representatives by a 224 to 200 margin. Nine Democrats voted in favor of the bill sponsored by Republican congressman August Pfluger of gas-producing Texas. Post-vote, on social media site X, another Texas congressman Ronny Jackson thundered: “House Republicans will not stand by while the Biden admin further DESTROYS America’s oil and natural gas sector to appease GARBAGE Green New Deal leftists” (no emphasis added). In advance of the vote, ClearView Energy Partners, a nonpartisan policy research group, summed up the bill as more of a “messaging effort and a start to debate than an end to the pause.” The group added that the bill was unlikely to pass the U.S. Senate. The League of Conservation Voters, a Washington, D.C.-based environmental advocacy group, described the “extreme bill” as an effort to block “the government’s ability to even study what is in the ‘public’s interest.’” (Reuters, @RepRonnyJackson, League of Conservation Voters)

Australia: U.S. oil and gas company Black Mountain’s delayed plans to frack in Western Australia’s spectacular Kimberley region suffered another setback after a “lack of investor interest” in its flagship Valhalla project compelled it to delist from the Australian stock exchange. 

EU: As part of the newly approved €6.9 billion (US$7.4 billion) “Hy2Infra” programme, new and repurposed hydrogen transmission and distribution pipeline infrastructure spanning 2,700 kilometers in Germany, Italy, and Slovakia has become eligible for EU subsidies. 

France: Extended strike action by workers over pay at Elengy’s Fos Tonkin and Fos Cavaou regasification terminals has led to sharply reduced sendout at the two Mediterranean coast facilities.

India: The U.S. Energy Information Administration has projected that India’s industrial sector will drive a tripling of national gas consumption by 2050; this amounts to yearly growth of 4.4% over the period, more than twice the assumed 2.0% annual growth rate of gas consumption in China, the next fastest-growing country.

Iran: Two explosions along the country’s main gas pipeline have been described by Tehran as a “terrorist act of sabotage,” though potential perpetrators have not been named. 

Ukraine: Kyiv is advancing legislation to facilitate the customs clearance of biomethane via gas pipelines for delivery to European markets

U.S.: Sales of heat pumps outpaced gas furnaces for the second year running in 2023, with the sales gap widening to 21%. Google searches for the term ​“heat pump” have also doubled in the last five years.

Massive deployment of renewables starts to eat into Brazil’s gas demand: Amid resurgent hydroelectric power generation and booming deployment of wind and solar energy, Brazil’s gas imports fell in 2023 to their lowest level since 2003, according to data from the National Agency for Petroleum, Natural Gas and Biofuels. Imports of almost 17 bcm of gas in 2021, to make up for a large drop in power generation from the country’s major dams caused by severe drought, declined last year to 6.5 bcm, continuing a generalized downward trend since 2015. Despite lower than average rainfall across most of Latin America’s biggest economy since the middle of 2023 as a result of El Nino, since the start of this year key hydro reservoirs are reported to be storing above average water volumes. At the same time, from 3 billion kilowatt-hours (kWh) in 2018, Brazil’s solar generation soared to 50 billion kWh in 2023, accompanied by a jump in wind generation from 46 billion kWh to 94 billion kWh in the same time period. According to the latest data from Global Energy Monitor’s solar and wind power trackers, Brazil has short-term prospects for a 30% increase in utility-scale solar and wind capacity. The country currently has a combined 38,000 megawatts (MW) of operating utility-scale solar and wind capacity and an additional 12,800 MW in active construction is expected to come online in the next 12–24 months. (Reuters, Global Solar Power Tracker, Global Wind Power Tracker) 

Public pressure moves Barclays on oil and gas financing: Responding to a storm of campaign pressure, Barclays, the UK’s biggest lender to the oil and gas industry, has caught up with a majority of Europe’s largest commercial banks by announcing its intention to stop direct finance for upstream oil and gas expansion projects or related infrastructure. In a range of measures published in a revised Climate Change Statement, the bank also committed to restricting its lending more broadly to energy companies expanding fossil fuel production. The responsible investment charity ShareAction was one of a number of groups to question Barclays’ ambition. Among various loopholes and limitations, the group criticized Barclays’ failure to get tough on fracking, “an activity the bank is heavily exposed to,” it pointed out. Echoing similar counters from banks under pressure to do more to reduce and end their exposure to emissions-intensive clients, Barclays has said its oil and gas finance is a marginal part of its overall activities, representing less than 2% of its total lending and less than 3% of its capital markets financing. However, a new analysis of the carbon footprint of Sweden’s top banks has found that while oil and gas lending at the country’s biggest bank SEB represents only 2% of its loan book, the sector accounts for 57% of the bank’s so-called “financed emissions.” (Barclays, BBC, ShareAction, Fair Finance International) 

Debt problems mount at Mexico’s Pemex: The Mexican government granted state-owned oil and gas company Pemex over US$6 billion in tax relief days after the world’s most-indebted oil major received a double-credit rating downgrade. Moody’s Investors Service downgraded Pemex’s credit score further into junk territory — from B1 to B3 — over concerns that the company would be near default without support from the Mexican government. The immediate state intervention for the company, which continues to be weighed down by debts in excess of US$100 billion, appears to be little more than a band-aid. Moody’s downgrade was based on an assessment that the company’s cash flow and credit metrics are expected to worsen over the next three years. A federal jury in New York has also heard how former Pemex managers received US$600,000 in bribes from a former employee of Vitol, the multinational energy and commodities trader, in exchange for inside information to help Vitol win a deal for the supply of ethane to the Mexican company. (Reuters, Bloomberg, Bloomberg) 
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U.S. public bank’s likely backing for huge drilling expansion in Bahrain prompts resignations: A US$4.2 billion investment programme to drill 450 new oil and gas wells in Bahrain is set to receive millions of dollars in public financial support from the U.S. following an initial funding green light from the board of the U.S. Export-Import Bank (Ex-Im), the country’s export credit agency (ECA). This latest fossil fuel financing from Ex-Im, expected to be approved next month and to involve more than US$100 million, has been slammed by campaign groups who have pointed to the ECA’s overlooking of a directive issued in the first months of the Biden administration that urged federal agencies such as Ex-Im to move toward “ending international financing of carbon-intensive fossil fuel-based energy.” The Bahrain deal has also provoked dissent within Ex-Im. Two members of an internal climate advisory group resigned from the institution after being frozen out of evaluations of the Bahrain project, with two other Ex-Im climate advisors reported to be on the brink of resigning amid mounting frustration over an apparent laissez-faire approach to fossil fuel projects. Ex-Im approved funding for a string of oil and gas deals last year, and major gas projects in Guyana and Papua New Guinea are still in the running for Ex-Im support despite significant legal and climate risks hanging over them. (Climate Home News, Friends of the Earth) 

BP and ADNOC announce gas joint venture to focus on Egypt: The Abu Dhabi National Oil Company (ADNOC), headed up by the COP28 president Sultan Al Jaber, has moved to expand its international gas portfolio in a deal with BP that will provide the Emirati company with access to significant gas deposits in Egypt and European markets. The deal, expected to be completed in the second half of this year, involves an unspecified investment from ADNOC and BP sharing three development concessions plus exploration projects in Egypt. Among these is the giant offshore Zohr field, which was discovered by Italy’s Eni and started producing in 2017. BP will take 51% ownership of the joint venture and ADNOC the remainder. (Bloomberg, Reuters)

The Private Equity Energy Tracker, Private Equity Climate Risks, February 7, 2024.

This online database provides a catalog of the global energy holdings of eight of the top North American private equity firms and finds that, in 2023, these firms were invested in at least 116 fossil fuel companies out of 184 energy companies overall. See also the press release here. 

North Macedonia must ditch its unrealistic gas plans and cut to a clean energy future, CEE Bankwatch Network and Eco-svest, February 15, 2024. (Pdf)

This 11-page briefing provides an overview of the Western Balkan state’s unrealistic gas development plans that feature a controversial — and publicly funded — interconnector with Greece at the heart of them.